Aluminicaste is denied Nafta preference

NEW YORK  Aluminum alloy billet shipped into the United States from Aluminicaste Fundición de México S. de RL de CV does not qualify for preferential treatment under the North American Free Trade Agreement (Nafta), according to a ruling by the U.S. Customs and Border Protection.

Aluminicaste was recently found to be storing around 850,000 tonnes of aluminum extrusions at its San José Iturbide, Mexico, facility (amm.com, July 2). Aluminicaste previously said that aluminum material (feedstock) was being shipped from China, "consisting of pipes, tubes, profiles, bars, rods and plates all made from aluminum alloy," Gwenn Klein Kirschner, acting director of U.S. Customs National Commodity Specialist division, said in the ruling.

The company is primarily using aluminum extrusions shipped from China as feedstock for aluminum alloy billet, according to two sources familiar with the matter. The process of remelting finished product into billet is not illegal but is generally considered entirely cost-prohibitive, the sources told AMM.

The Aluminicaste website does not provide details of the companys ownership structure. However, Aluminicaste president and chief executive officer Z.P. Liu also is president and chief executive officer of China Zhongwang Holdings Ltd., the second-largest industrial aluminium extrusion product developer and manufacturer in the world. A source familiar with the matter confirmed that Liu is the owner of both companies.

Aluminicaste, which produces secondary billet, slab and forging billet, had applied for preferential treatment in order to be eligible for the tariff treatment and quantitative limitations set forth in Naftas tariff schedule, according to the ruling.

However, the ruling noted that preferential treatment is only given to goods wholly obtained or produced entirely in Canada, Mexico and/or the United States or have been transformed in those territories, and each of the non-originating materials used in the production of such goods must undergo a change in tariff classification.

"They (aluminum alloy billets) are neither wholly obtained nor produced entirely in the territory of Canada, Mexico and/or the United States," the ruling said. "Since each of the non-originating Chinese materials (feedstock) used to make the billets are classified in various headings in Chapter 76 and are not classified in another chapter of the (U.S. harmonized tariff schedule), the tariff shift requirement has not been made. As such, the aluminum alloy billets do not qualify for preferential treatment under the Nafta."

As Aluminicaste has expanded, the company has continued to struggle with tariffs and taxes in the markets it serves, Aluminicaste North American sales director Neil Johnson told AMM in March. "Weve done that, and were moving forward," he said, noting that the task was less daunting in the United States due to Nafta (amm.com, March 21).

Johnson did to respond to a request for comment regarding the U.S. Customs ruling.